Jean-René Halde is the first one to say he doesn’t have all the answers. But it’s clear from his varied and illustrious career as a CEO, board chair and director, and from his remarks in the following conversation with governance and leadership adviser David W. Anderson, that Halde usually has the right answer when it’s needed. He’s run numerous public companies in a wide range of sectors and had an especially significant run as the CEO of the Business Development Bank of Canada. As a director, he’s grappled with activists, high-profile takeovers and complicated voting structures. The sum of that experience is revealed in his insights on CEO-chair and CEO-board relationships, where he endorses a “no surprise” policy and a team approach to problem-solving where success still relies on individual accountability.
David Anderson You became a CEO in your early 30s and remained a CEO for over 35 years, culminating in your leadership of the Business Development Bank of Canada. How did you become a CEO at such an early age?
Jean-René Halde It’s something I don’t take credit for. At that time there was a desire for francophones to take up top executive roles in Quebec and the reality was there were not many of us with advanced education, as I had from Western and Harvard. Some of my Harvard classmates from Quebec became a premier, a finance minister and mayor of Montreal.
David Anderson Even if you benefited early on from a direct effort to promote francophone leaders, once in the top job, you proved the quality of your leadership over an illustrious career. From the vantage point of a long-tenured CEO, what lessons on leadership can you distill?
Jean-René Halde I hesitate to answer as I don’t want to contribute to the idea there’s a leadership formula. There’s nothing magical here. My view is more pragmatic. Leadership is about remaining yourself, being humble, asking the right questions, understanding your blind spots. It’s about following through on commitments and working hard. It takes courage, fortitude and sometimes luck. I don’t think it’s complex. It’s how you behave and the example you set. If you’re going to ask others to work hard, be one of the first to the office in the morning and last to leave. Leadership is a collection of a lot of simple things easily said that are tough to execute well. Execution is where people falter.
David Anderson What advice might you offer CEOs in their work with boards?
Jean-René Halde If you want to retain the confidence of your board, make sure your whole management team has a “no surprise” policy and don’t play games; it always turns against the CEO. Talk about bad things that have happened and anything that’s looming. This approach builds confidence, especially when you discuss issues that you could hide. Directors lose confidence and stop trusting when they feel they are not being given the full story. At this point directors begin to question everything. When that happens, directors have a choice to make—change the CEO or resign.
David Anderson Did you ever resign as a director?
Jean-René Halde I’ve resigned from a board because I knew I wasn’t getting the straight goods and I was convinced the CEO was not listening. You shouldn’t stay on a board if you don’t believe you’re getting 100% truth about what’s going on. It’s a different situation when management wants to provide information but isn’t able to get it. Often management is frustrated they don’t have the information to share. While that’s not comfortable for the board either, you know you’re all in the same boat. There will always be a huge asymmetry in knowledge, but you must feel the management team operates with an attitude of transparency and is dedicated to providing you with everything you need.
David Anderson When is it appropriate for a board to get outside information of its own accord, to reduce proactively the board-management information asymmetry?
Jean-René Halde The board should always form an independent view, but only under exceptional circumstances should it go outside, excluding the typical work with auditors and HR specialists and the like. I’d consider it when the management team isn’t voluntarily giving information or in an involuntary sense they’re not seeing the world as the board is. But I’d avoid running a parallel process; I’d go through the management team to promote mutual study. At BDC, we weren’t doing well with venture capital so we said to the board we weren’t sure how to turn it around. With board support, as we weren’t hiding anything, we hired McKinsey. You want management to have outside help when necessary and to be sure as a board you also understand what’s at stake. This arrangement worked at BDC because we had a relationship of trust built on transparency. The relationship between chair and CEO is particularly important in this respect.
David Anderson How meaningful is the relationship between the chair and CEO, more generally, to the functioning of both board and management?
Jean-René Halde The right chair and CEO combination is essential because the impact of that relationship is huge. It works when the CEO sends the signal to the management team to be open and the chair sets the tone with the board to handle good and bad news through productive discussion. The tone from both CEO and chair is key, as is their ability to complement each other’s roles. If you get this right, everything else will get fixed. As a recent director at TD, I’ve observed a healthy level of trust between the board and management, facilitated by a close relationship between the chair and CEO.
David Anderson My observation of boards suggests the performance of the chair is the greatest determinant of board effectiveness. Does your experience bear this out?
Jean-René Halde Yes, the chair is vital to the success of the board and the CEO, and this is not well enough recognized. We refer to the board and its centrality in governance, but the board behaves to the level of the chair.
David Anderson Given this uniquely valuable role and the effect it has on the quality of corporate leadership, how do boards think about chair succession?
Jean-René Halde In particularly complex organizations it’s ideal the next chair should come from the board because a lot of time and effort is required to understand all facets of the business, the industry context and the senior executives. When done well, the chair’s successor is someone you’ve worked with on the board for a while and has shown informal leadership on various issues. It’s someone well respected by other board members who is seen as a natural fit. So when a board is selecting directors, you want people who could become a chair. In the case of Crown corporations, they have the unfortunate habit of appointing from the outside and not through a rigorous process from the inside. When it does work, it’s because of specific circumstances. For example, in BDC’s case, Sam Duboc came with the right background and had a brilliant mind, so he learned the business quickly and asked the right questions. However, in general, if you appoint from the outside, you should have extreme rigour to mitigate the risk.
David Anderson The chair and CEO are equally important in the tone they set with their respective colleagues and the quality of corporate leadership, both in governance and management. Are boards rigorous enough in chair succession, commensurate with its role?
Jean-René Halde It’s fair to say boards put in more effort and follow clearer process in CEO succession than chair succession. It’s not uncommon for boards to let their chairs make the call when to leave. When used properly, regular board assessment, including a review of chair performance, is a good tool to stimulate discussion on chair performance, the future-oriented needs of the board, and the timing of the next chair. I can say in hindsight, reflecting upon my own experience as chair, that I could have worked on chair succession sooner and introduced more rigour to the process.
David Anderson It’s a sign of progress that thinking evolves on such matters. One issue that has seen hard opinions soften of late is dual-class shares. Where do you stand on notions of shareholder democracy and one share, one vote?
Jean-René Halde The pendulum is shifting back from the view that dual-class shares are bad and never ought to embraced. This view was championed by shareholder rights groups such as the Canadian Coalition for Good Governance and many governance experts. From a financial point of view, one can understand the company isn’t always in play, so you don’t get the premium, but companies with dual-share structures do well over the course of time as many studies have shown. From a Canadian standpoint, we have companies still here that would have gone to foreign ownership. I’m glad the accepted view is now more nuanced and balanced. There is still a risk of abuse from controlling shareholders; this reinforces the need for a particularly strong board that will do what’s right for the corporation.
David Anderson You’ve contributed to decisions as a director in high-profile transactions, balancing competing interests to seek the best outcome for the corporation. What was your thought process?
Jean-René Halde At Rona we received an acquisition offer from Lowes and immediately we asked ourselves, “How do we think about this in the appropriate way? What in fact is ‘the company’ whose interests we have to protect?” We decided the company had three constituents: employees, suppliers and shareholders. A successful offer had to adequately address all three. As we were happy with the growth trajectory of the company, we needed a compelling offer on all counts. In the end, the offer was very good to shareholders, while doing the right thing for employees and suppliers. We weighed the benefits to each of the stakeholders over the long term, looking at the jobs of our employees, the business of our suppliers and the financial reward to shareholders. With the right price and right behaviours vis-à-vis other constituents, such as moving head office to Montreal and making an effort to understand Canadian suppliers, approving the sale was an easy call intellectually, but still not emotionally.
David Anderson Shareholder activism also puts directors’ duties in sharp relief. How do you think about increased efforts by some shareholders to exert corporate control and a board’s efforts to serve the corporate interest?
Jean-René Halde People are too black-and-white on shareholder activists. Learning from the experience, boards must be more alert and quicker on their feet to address serious performance issues and act to preserve long-term value. When a company is sliding in terms of results, the board should ask tough questions and react quickly to get it fixed. That means not standing by as performance deteriorates. It’s better to have an activist board than have activists on board. The board still needs to make sure the company is investing for the future, applying its wisdom in reacting quickly enough to a deteriorating situation to address the issue—and discerning where to cut and where to preserve or invest anew.
David Anderson The federal government is opening up its director selection process for Crown corporation boards via the internet, seeking more diversity and transparency in the process. Is this the future of board search?
Jean-René Halde No, but there’s nothing wrong saying to the general public we’re looking for directors. General outreach is good as long as the right people get chosen. We’ll still need active recruitment to find the best talent. This should be a board-led effort involving full search with the minister making the final decision on the advice of the board. Let’s remember these crown corporations are big—CBC, Canada Post, BDC, EDC, CMHC. They require the best talent with the right mix of skills, experience and temperament. No reasonable person would leave it to chance, hoping to attract the right talent by simply asking people to apply online. The talent you want won’t be attracted by the poor pay and onerous application process. Most have to be approached to be aware of the opportunity and wooed to take it seriously. Our crown corporations, like our public companies, need the best talent we can find to lead them.
David W. Anderson, MBA, PhD, ICD.D is president of The Anderson Governance Group in Toronto, an independent advisory rm dedicated to assisting boards and management teams enhance leadership performance. He advises directors, executives, investors and regulators based on his international research and practice. E-mail: email@example.com. Web: www.taggra.com.
Jean-René Halde — Biography
Corporate directorships TD Bank Financial Group; Commandité-directeur Avions C Series Inc.
Board chair École de Technologie Supérieure
Current non-profit directorships Institute of Corporate Directors; Montreal General Hospital Foundation; World Presidents’ Organization
Former chair Montreal Heart Institute; Grocery Products Manufacturers of Canada; Association des MBA du Québec
Former corporate directorships CCL Industries, Inc.; Gaz Metropolitain Inc.; Rona Inc.; Groupe Vidéotron Ltée; OMERS Capital Partners; Phoenix International Life Sciences Inc.; Provigo Inc.; Reichhold Chemicals Ltd.; Unigesco Inc.
Former non-profit directorships Association des MBA du Québec (chair); Canadian Council of Grocery Distributors; Conference Board of Canada (chair); Grocery Products Manufacturers of Canada (chair); Montreal General Hospital Foundation; Institute of Corporate Directors; Montreal Heart Institute (chair); Quebec Deposit Insurance Board
Former CEO Business Development Bank of Canada; Experlead Corp.; Irwin Toy Ltd.; Livingston Group, Inc.; Culinar, Inc.; Atlantique Video and Sound Inc.; Metro-Richelieu, Inc.
Education BA, College Sainte-Marie; MA (Economics), Western University; MBA, Harvard Business School; ICD.D, Institute of Corporate Directors
Current age 67
Years of board service 37
Photography by Jeff Kirk